Government joins whistle-blower’s false-claims suit against Gallup

Aug. 23, 2012 - 02:59PM
|

The Justice Department is joining a whistle-blower lawsuit against the Gallup Organization to pursue claims that the polling group inflated prices on contracts with the U.S. Mint, the State Department and other federal agencies, the Justice Department announced Wednesday.

According to a lawsuit filed in 2009 by former Gallup employee Michael Lindley, Gallup violated the False Claims Act between 2008 and 2009 by allegedly giving the government inflated estimates of the hours it would take to perform its services, even though it had lower internal estimates of the hours required.

On some contracts, including an Air Force Materiel Command contract worth $10 million, Gallup officials allegedly based their estimates not on the hours most likely required to complete the work but on the hours that could be billed to reach the maximum allowable price under the contract, Lindley’s lawsuit claims.

The government allegedly lost at least $10 million because of the false claims, according to Lindley’s lawsuit.

Under the whistle-blower provisions of the False Claims Act, private parties can sue on behalf of the United States for submission of false claims to the government. The False Claims Act authorizes the government to intervene in such a lawsuit and take over primary responsibility for litigating it.

The government can recoup up to three times its losses, plus civil penalties, under the act. The whistle-blower is entitled to receive a share of any funds recovered through the lawsuit. “Contractors must understand that it is unlawful to use inflated estimates to obtain higher contract prices,” Stuart Delery, acting assistant attorney general for the department’s civil division, said in a news release.

The Justice Department said it also plans to bring additional claims related to a Gallup subcontract with the Federal Emergency Management Agency. As part of the whistle-blower lawsuit, Lindley alleged that Gallup tried to hire a FEMA official who was responsible for Gallup’s subcontract while, at the same time, Gallup was seeking to obtain additional funding from FEMA for Gallup’s subcontract.

Gallup issued a statement saying that the claims filed by the Justice Department “are wholly without merit.”

“We intend to fight these baseless charges vigorously and look forward to resolving the matter in court,” the company said.

The lawsuit was filed in U.S. District Court for the District of Columbia.